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Among the many skills common to successful investors, one trait is paramount: the ability to mitigate the risk of known unknowns.

When some react just to the day's market events, like Friday's weak economic data that sent stock prices lower, seasoned investors prepare for major market events that they know are coming, but that have uncertain outcomes, such as the U.S. presidential election in November or the so-called fiscal cliff at year's end.

However, with the Chicago Board Options Exchange's Volatility Index (VIX) now at a relatively benign level around 15, investors should consider hedging stocks in anticipation of a volatility shock, or sharp rise in the VIX.

It's always hard to predict exactly when a shock will occur, which is why many investors hedge positions, and portfolios, when the stock market is relatively calm and the VIX is muted.

Seasoned, or perhaps I should say battle-scarred, investors are conditioned to view mid-teen VIX readings as a sign to be cautious about stocks. This instinct has preserved considerable amounts of money, because muted volatility levels historically have been followed by sharp equity-market declines in which the VIX spiked toward 30, into the mid-40s and even above 80.

FORTUNATELY, WE KNOW that implied volatility is mean-reverting, meaning that patterns of volatility repeat. This helps investors think more clearly about risk events. Moderate volatility shocks, such as the one that occurred in early June, when the VIX peaked near 28, are typically followed by up to four months of a trough phase, during which the VIX remains below 20.

This explains why the recent advance of stocks from their mid-June lows probably is petering out, as the trough phase of the volatility cycle reaches maturity and becomes vulnerable, just as seasonal forces are beginning to drive volatility toward its historical late-October peak.

It's difficult to speculate about the potential magnitude of the next volatility shock, but history offers a framework that investors can use in formulating their hedging strategies. In the past five years, the Chicago Board Options Exchange's Volatility Index has spiked to the upper 20s or higher on 10 occasions. The corresponding corrections in the Standard & Poor's 500 were 8% to 16%, on average.

Implied volatility now hovers near long-term lows, and options' implied volatility doesn't currently reflect the expectations of a sharp stock-market decline that many investors harbor. Thus, conditions are nearly ideal for buying defensive options to hedge stock portfolios.These hedges will increase in value should any of the known unknowns send the stock market lower, and the VIX higher.

ANYONE WHO OWNS A STOCK that has rallied sharply this year -- or worries about the risk of a sharp decline -- can "collar" that position.

A collar entails selling a call, expiring in December or January, with a strike price about 10% higher than the associated stock price. The money received for selling the call can be used to buy defensive put options priced 10% lower than the stock and that expire at the same time as the call. To further lower the cost of hedging, some investors also sell another put with an even lower strike price than the one that was bought.

The so-called put-spread collar is an elegant, capital-efficient way for investors to reduce risk without significantly foregoing additional gains. The tradeoff, however, is that investors are obligated to sell their stock if its price hits a level above the call's strike price.

On the other hand, should stock prices slide, the defensive put options would offset any losses blunting the impact of a volatility shock.